Abstract

Value in healthcare is measured in terms of the patient outcomes achieved per dollars spent. As such, when payers and policymakers measure the output of healthcare systems, it is not the volume of services delivered that matters, but rather the outcomes. In light of this, there has been an uptick in interest in value- or outcomes-based contracts. These contracts are supposed to reflect pay-for-performance arrangements, which reimburse for the value a technology or health service adds when it achieves a certain level of improvement in a patient's condition.

Value-based payment mechanisms have been implemented across healthcare sectors. Such mechanisms include alternative payment models for physician reimbursement, hospital value-based purchasing, and value-based arrangements (VBAs) between payers and pharmaceutical manufacturers.1–4VBAs aim to promote greater patient access to effective, but often costly, biopharmaceutical therapies by linking reimbursement, coverage of,or payment for a product to clinical or utilization outcomes.

In the case of biopharmaceuticals, drug makers share with payers in the risk of their drugs’ success or failure (hence the expression“risk-sharing arrangements”).